The NPV (expected payoffs) of a technology investment depends on the assumptions made by managers involved in the adoption of the new technology. These assumptions reflect their expectations regarding implementation (budget, time, and functionality), expectations regarding users’ ability to extract value from the new technology (increase sales or contain cost), as well as expectations regarding reactions of competitors and trading partners.
In previous chapters, we focused on factors that may affect these assumptions, such as business and IT strategy, IT capability, stage of technology adoption, and industry structure. This week, we shift our focus to implications of failure to meet these assumptions (risk analysis) on NPV. We will use this risk analysis to make recommendation on how to monitor the progress during implementation and value extraction. The aim of the monitoring process is to introduce an element of accountability and ensure that proper action would be taken to ensure the maximization of the value of the technology investment.
Topics and Readings for Week 12
Theory: We will focus on Chapter 8 (monitoring IT investments). The primary focus of this chapter is on the idea of causality (cause and effect) as the foundation for the creation of a balanced scorecard for technology implementation and use.
Seminar: We will use the Whirlpool case study to review the NPV analysis and perform a risk analysis (sensitivity analysis). We will use data based on different scenarios to generate predictions regarding the expected effect of these scenarios on the NPV of the project.
Assignments for Week 12
The online quiz will be a based on chapters 8 and material covered in the seminar. The quiz will be available on Friday at 12:30 pm.
The team project is due on Monday at 8:30 am. Please upload your project file as well as your data and R-script in the appropriate Learn dropbox.
The peer evaluation for the Team Project will become available on Tuesday - July 19 and remain open till July 26th. Please read the syllabus and make sure you understand the implications of the peer evaluation on the grade of your peers before you submit your evaluation. The submission of peer evaluation is a course requirement.
Prof. Stratopoulos
